Octopus Beats ‘Vampire Squid’ as Goldman Falls Short in World Cup

Stefan Porwoll, manager of Sea Life Aquarium presents the memorial of Paul the octopus on January 20, 2011 in Oberhausen, western Germany.

Agence France-Presse/Getty Images

A now-deceased U.K.-born cephalopod seems to have succeeded where Goldman Sachs’s economics team stuttered.

Paul The Octopus shot to fame in 2010 by correctly predicting the outcome of each game involving Germany at that year’s FIFA World Cup as well as the final won by Spain. In contrast, Goldman’s much-fancied economics team has managed to achieve a paltry success rate of 37.5% so far for the preliminary stage at this year’s competition.*

The less-than-impressive results underscore that past performances on the soccer pitch and prestige are not reliable predictors of future success.

But should traders and investors now seek refuge in the wisdom of animals or birds with perceived Oracle-like properties?

Not quite.

For one, the sample size of Paul The Octopus’ predictions was much smaller. It is much harder to accurately predict the correct result randomly for 48 games than it is for 8 games. The eight-armed creature also had to just pick the winner out of two teams. Had it been confronted with the task of predicting a draw as well, the probability of getting the right result would have fallen to 33% from 50%.

Predicting draws has been Goldman’s Achilles heel at this tournament. There have been far fewer than the bank estimated.

What’s also becoming increasingly clear is that many of the pretenders to Paul The Octopus’s crown are one-trick ponies. Nasar the horse jockeyed into position to fill the gap left by Paul The Octopus’s demise but its only prediction: a win for the USA over Germany turned out to be incorrect. Big Head the Brazilian turtle’s success rate is iffy as well.